Jul 30 Diversity, Inclusion and Equity - The Impact of Women in Leadership

Diversity, inclusion and equity are topics on the radar of corporations around the world. Articles, white papers, reports and surveys have been investigating these areas, focusing on the advantages they have on corporate and government performance:

Delivering through Diversity, a report produced by McKinsey and Company, notes that companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability.

A Harvard Business Review study noted that companies going from having no women in corporate leadership (the CEO, the board, and other C-suite positions) to a 30% female share is associated with a one-percentage-point increase in net margin — which translates to a 15% increase in profitability for a typical firm.

A global survey conducted by Price Waterhouse Cooper found that organizations are committing to diversity and inclusion at higher rates than ever, with 87% of respondents indicating that D&I is a stated value or priority for their organization.

Diversity in the age of your employees is also a key advantage. NBC News notes that millennials are changing the workplace, looking for work that will have meaning and purpose, use their talents and strengths to do what they do best every day. US News looks to the advantages of older workers, citing a survey of HR professionals that indicated “77% of those surveyed look for experience first, followed closely by maturity/professionalism and a stronger work ethic – traits chosen by 71% and 70%, respectively, of 1,913 survey respondents.”

Global accounting firm Grant Thornton makes an interesting comparison between gender diversity and renewable energy. While it’s generally accepted that we need to move away from the use of fossil fuels because it’s bad for the planet, we are also well aware that it’s time to increase the number of women on the boards of companies because it’s good for business. A McKinsey and Company report said that “gender diversity in 2014 meant top companies were 15% more likely to experience above-average profitability. Almost exactly three years later, this number rose to 21% and continued to be statistically significant.”

But while there are still some outstanding questions about what will power the future, there is no question about the advantages of increasing the number of women in the corporate world.

Numerous sources, including the aforementioned study, make it clear that having women on boards is materially better for companies. “Just as the world will grow faster and more sustainably powered by renewables, your business growth potential will increase with greater diversity in decision-making,” writes Francesca Lagerberg in Women in business: the value of diversity. “Our analysis suggests that the profit foregone - or opportunity cost - by the companies with male-only boards is a staggering $655 billion across the three economies. In the UK and US the impact of moving to mixed boards on the S&P 500 and FTSE 350 could boost GDP by around 3%.”

Photo by Christina Morillo

The direct(or) impact on giving

The knowledge that there are benefits to having women in leadership roles isn’t new, and that includes their effect on corporate giving programs.

“The research supports that, as gender diversity increases among key decision-makers, the C-suite and corporate boards, the number incidence of engagement of CSR increases, as does the quality of each engagement and the amount of financial resources devoted to these initiatives. In short, CSR moves from being a quaint notion about doing nice things to being understood as meaningful to the culture of the company when the number of women in decision-making roles increases,” writes Naveen Mehta, a member of Legal Leaders for Diversity and Inclusiveness at Canadian Lawyer Magazine.

The report goes on to say that: “while it is plausible that companies committed to CSR could attract more diverse leaders, it is likely the connection works in reverse. Research examining the impact of gender-inclusive leadership, when taking time into account, suggests gender-diverse leaders are employed before increases in CSR are observed.”

While the eldest of this generation are still in their late teens, they’re already positioning themselves to make their mark in the modern workplace. Almost this entire segment (98%) believe companies should be actively supporting social and environmental causes. But rather than see large companies as an impediment; “They see companies as critical partners. In fact, this generation is the most likely to believe companies should help address urgent issues (94%) – more than their older millennial cohorts or the average American.”

Keep your options open

Gender-diverse boards are beneficial to your business as well as society as a whole. They’re better equipped to ensure corporate citizenship standards are not only met, but exceeded, building stronger, more sustainable companies.

Of course, creating and managing a CSR program of value takes a good deal of work, but it’s an essential component of employee engagement. Without one, your chance of attracting quality talent drops considerably; 85% of women in America have said they wouldn’t work for companies that don’t have a strong CSR offering. Not only that, but organizations with a solid commitment to CSR also have more satisfied clients, leading to improved brand loyalty, so it’s a win-win situation all around.

Photo by RawPixel

Diversity for employee engagement

Having an effective CSR program that moves beyond the superficial and provides a strong, meaningful approach to helping communities takes planning and commitment from all levels of your organization. And the more diverse your organization, the more diverse a program you will need to create to ensure complete employee engagement and participation.

SmartSimple is a global leader in cloud-based automation software, offering unique process solutions used by nearly 300 clients in over 190+ countries. Some of the largest companies in the Fortune 100, as well as global foundations and government agencies, choose SmartSimple streamline their business processes and deliver positive, lasting change in their local communities and beyond.